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Jackson Rumbles Onto the Index-Linked Annuity Field

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What You Need to Know

  • Jackson separated from its former parent, Prudential PLC of London, in September, through a spinoff.
  • The company said one of its goals was to launch the Market Link Pro family of registered index-linked annuities.
  • Jackson sees the $24 billion RILA market as target rich.

An individual variable annuity giant says it would like a big slice of the registered index-linked annuity (RILA) market pie.

Jackson Financial today announced the official launch of its new Jackson Market Link Pro and Jackson Market Link Pro Advisory RILA contracts — and raised the possibility that the $24 billion RILA market rankings could look a lot different a year from now.

The new Jackson RILA contracts will give the buyers a chance to use annuities with crediting rates linked to the performance of one or more investment indexes.

  • The Market Link Pro product is designed for sale through agents who earn commissions.
  • The Market Link Pro Advisory product is aimed at fee-based advisors.

There are no annual contract fees. Withdrawals made during the first six years are subject to a withdrawal charge or market value adjustment.

Jackson is issuing the products through Jackson National Life Insurance Company. The products are not available in Nebraska, Oregon or New York state.

The Market

Because RILAs are registered with the SEC as securities, they can expose the buyer to  the possibility of loss of principal. That means an issuer can limit exactly how much market risk it offers to assume.

A RILA issuer’s ability to control how much risk it assumes makes the products easier and cheaper to hedge than non-variable indexed annuities, which offer the buyer principal guarantees.

Sales in the market have grown to $24 billion in 2020 from less than $4 billion in 2015, according to Secure Retirement Institute survey data.

Jackson

Jackson is a Lansing, Michigan-based company that was a subsidiary of Prudential PLC of London. Prudential converted Jackson into a separate, publicly traded company in September, by distributing shares of Jackson stock to its own shareholders.

Prudential and Jackson said while the spinoff was in the works that one major goal was to help Jackson raise  the capital it needed to develop new products.

Jackson may have more chance than the typical market newcomer to eat up RILA market share.

The firm was the market share leader in the U.S. traditional individual variable annuity market in the second quarter, with $9.4 billion in new sales, or 22% of all new U.S. individual variable annuity sales, according to the Secure Retirement Institute. Its volume was twice as high as the volume of the second-ranked issuer, TIAA.

Aimee DeCamillo, Jackson’s chief commercial officer and president of  the Jackson National Life Distributors unit, noted that the company will be selling the products through one of the largest annuity distribution teams in the country.

The Index Menu

Both the commission-based and fee-based contracts come with a built-in death benefit, and both offer holders access to a menu of five index options. The menu includes the MSCI Emerging Markets index and the MSCI KLD 400 Social index — an environmental, social and governance option.

The Crediting Methods

Contract owners also can choose between two different methods for calculating and locking in any index-linked returns.

  • A cap crediting method lets the user get a crediting rate increase, up to a pre-set limit, if the index return is positive at the end of the time period used in the calculations.
  • A performance trigger crediting method lets the user get a crediting rate increase, equal to a pre-set “performance trigger rate,” if the index return is flat or positive at the end of the time period used in the return calculations.

The time period, or term, could last either one year or six years.

A contract owner can switch between the two crediting methods at the end of a one-year or six-year term.

The Value Protection Options

Jackson also will let contract owners choose between two different types of account value protection options.

  • The buffer option can protect the contract owner against value losses of 10% or 20%.
  • The floor option can hold the owner’s losses to either 10% or 20%, and then protect the client’s account value against further losses.

Jackson will let a contract owner use any index option with any crediting method or account value protection option, the company says.

A screenshot of Jackson’s website. (Image: Jackson)